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IIUC, Tesla is ~40% owned by institutional investors. I'd think they're immune to the cult-of-personality effect, at least if approaching that stock from a fun

IIUC, Tesla is ~40% owned by institutional investors. I'd think they're immune to the cult-of-personality effect, at least if approaching that stock from a fundamentals perspective. Is that view outdated, e.g. because of modern trading algorithms? Caveat: I'm not an educated investor.

blitzar 2y ago
> institutional investors A very high % of "institutional investors" will be indexers, TSLA is 2.5% of the NASDAQ and 1.2% of the S&P 500. That likely gets you 99% of the rationale for the holdings.
sofixa 2y ago
> I'd think they're immune to the cult-of-personality effect, at least if approaching that stock from a fundamentals perspective. > Is that view outdated, e.g. because of modern trading algorithms? It's outdated or it might have never been true. It's not that much to do with modern trading algorithms IMO, but more about FOMO (Fear of Missing Out) and the general market culture. There have been many frauds, near frauds or simply unviable business models, where institutional investors fell for it, including pretty obvious ones like FTX, Frank by Charlie Javice, DC Solar, WeWork, Uber and Theranos. Everyone is afraid of missing the next Google/Nvidia/Microsoft/Apple, so anything goes in the hope that something, anything could hit it big. Add in the extra belief that "green" stuff (which Tesla supposedly is) is super important, at a personal and global level, with many countries enacting bans on cars with combustion engines, and there was lots of belief in Tesla. At one point they were valued higher than all other auto manufacturers combined, while delivering a fraction of the output of the smaller ones like Renault. Under the mistaken and wrong assumption that it will somehow be harder for legacy automakers to switch to electric vehicles than it would be for Tesla to ramp up production. Spoiler: It's harder to manufacture a million cars than it is to put batteries in 5 of them. This will probably not last with the new, higher interest rate environment we're in. Maybe.
- rsynnott 2y ago
  > Theranos In fairness to institutional investors, they weren't a _huge_ factor in Theranos's backing, were they? AIUI it was mostly, essentially, individual investment by specific individual rich people, and some VCs.
- taylodl 2y ago
  BUT - at one point recently Tesla had a market value greater than the top 10 legacy automakers combined. It's simply insane for anyone to have thought Tesla was that valuable. For Tesla to be that valuable, just about everybody would have to be driving a Tesla. Tesla has too few models and customer tastes are too varied for that to have the remotest possibility.
positr0n 2y ago
How much of "normal" stocks are owned by institutional investors? I own plenty of Tesla through institutional investors, even though I don't want to, because my entire net worth is my house, emergency fund, and funds that hold concepts like "the entire market" or "all large cap companies"
enslavedrobot 2y ago
I'm a Tesla investor. It's not about a cult. Tesla is the fastest growing manufacturing company in the history of the world. They are the only profitable EV company and deploy the most stationary storage. They are leaders in distributed energy services and are positioning themselves well to earn ARR from every battery and car they sell. I used to wonder why anyone who wasn't part of the Steve Jobs cult would buy Apple since they sold overpriced junk. Then I wondered why anyone would invest in Amazon because nobody trusts online sales, they want to look at things before they buy. After I went to business school and learned financial modelling I decided I would never miss another category winner in a nascent large market again. Now I'm a millionaire.
- s08148692 2y ago
  +1 I'm anywhere between indifferent and disgusted by Musks political views, depending on the issue. Does that make me bearish on Tesla? Absolutely not. On the contrary I'm more bullish now than ever. I see so many people lose all objectivity and reason when they look at any Musk enterprise because they don't like the man
- ahahahahah 2y ago
  > Tesla is the fastest growing manufacturing company in the history of the world Is it? BYD was founded the same year and is producing nearly 2x as many cars as Tesla. NIO sold it's 500,000th car within 9 years of its founding, it took Tesla 15 years to do the same. We don't even need to look outside of car manufacturers to find counterexamples. Tell me again about it not being a cult.
  - enslavedrobot 2y ago
    Tesla revenue was 96 billion last year. Byd's was ~85 billion. By earnings it's not even close.
    - enslavedrobot 2y ago
      Founded 1995. Lol.
Eddy_Viscosity2 2y ago
Institutional investors are still just people. Nothing special about them. They are as prone to all the failures of judgements that everyone else is.

blitzar 2y ago

> institutional investors A very high % of "institutional investors" will be indexers, TSLA is 2.5% of the NASDAQ and 1.2% of the S&P 500. That likely gets you 99% of the rationale for the holdings.

sofixa 2y ago

> I'd think they're immune to the cult-of-personality effect, at least if approaching that stock from a fundamentals perspective. > Is that view outdated, e.g. because of modern trading algorithms? It's outdated or it might have never been true. It's not that much to do with modern trading algorithms IMO, but more about FOMO (Fear of Missing Out) and the general market culture. There have been many frauds, near frauds or simply unviable business models, where institutional investors fell for it, including pretty obvious ones like FTX, Frank by Charlie Javice, DC Solar, WeWork, Uber and Theranos. Everyone is afraid of missing the next Google/Nvidia/Microsoft/Apple, so anything goes in the hope that something, anything could hit it big. Add in the extra belief that "green" stuff (which Tesla supposedly is) is super important, at a personal and global level, with many countries enacting bans on cars with combustion engines, and there was lots of belief in Tesla. At one point they were valued higher than all other auto manufacturers combined, while delivering a fraction of the output of the smaller ones like Renault. Under the mistaken and wrong assumption that it will somehow be harder for legacy automakers to switch to electric vehicles than it would be for Tesla to ramp up production. Spoiler: It's harder to manufacture a million cars than it is to put batteries in 5 of them. This will probably not last with the new, higher interest rate environment we're in. Maybe.

rsynnott 2y ago
> Theranos In fairness to institutional investors, they weren't a _huge_ factor in Theranos's backing, were they? AIUI it was mostly, essentially, individual investment by specific individual rich people, and some VCs.
taylodl 2y ago
BUT - at one point recently Tesla had a market value greater than the top 10 legacy automakers combined. It's simply insane for anyone to have thought Tesla was that valuable. For Tesla to be that valuable, just about everybody would have to be driving a Tesla. Tesla has too few models and customer tastes are too varied for that to have the remotest possibility.

positr0n 2y ago

How much of "normal" stocks are owned by institutional investors? I own plenty of Tesla through institutional investors, even though I don't want to, because my entire net worth is my house, emergency fund, and funds that hold concepts like "the entire market" or "all large cap companies"

enslavedrobot 2y ago

I'm a Tesla investor. It's not about a cult. Tesla is the fastest growing manufacturing company in the history of the world. They are the only profitable EV company and deploy the most stationary storage. They are leaders in distributed energy services and are positioning themselves well to earn ARR from every battery and car they sell. I used to wonder why anyone who wasn't part of the Steve Jobs cult would buy Apple since they sold overpriced junk. Then I wondered why anyone would invest in Amazon because nobody trusts online sales, they want to look at things before they buy. After I went to business school and learned financial modelling I decided I would never miss another category winner in a nascent large market again. Now I'm a millionaire.

s08148692 2y ago
+1 I'm anywhere between indifferent and disgusted by Musks political views, depending on the issue. Does that make me bearish on Tesla? Absolutely not. On the contrary I'm more bullish now than ever. I see so many people lose all objectivity and reason when they look at any Musk enterprise because they don't like the man
ahahahahah 2y ago
> Tesla is the fastest growing manufacturing company in the history of the world Is it? BYD was founded the same year and is producing nearly 2x as many cars as Tesla. NIO sold it's 500,000th car within 9 years of its founding, it took Tesla 15 years to do the same. We don't even need to look outside of car manufacturers to find counterexamples. Tell me again about it not being a cult.
- enslavedrobot 2y ago
  Tesla revenue was 96 billion last year. Byd's was ~85 billion. By earnings it's not even close.
  - enslavedrobot 2y ago
    Founded 1995. Lol.

Eddy_Viscosity2 2y ago

Institutional investors are still just people. Nothing special about them. They are as prone to all the failures of judgements that everyone else is.